Spain will next year take centre stage in the battle to save the euro.

Madrid has estimated that it will need to borrow €207 billion — 20 per cent of GDP.

The Government has been promised up to €100 billion from the euro-area rescue fund to help recapitalise its crippled banks. However, if foreign investors lose patience and bond yields rise, Mariano Rajoy, the Prime Minister, may have to turn to the European Central Bank, which has promised to buy unlimited amounts of Spanish bonds in secondary markets, which could stimulate growth.